Dynamic Capabilities and Strategic Management

David J. Teece, Gary Pisano and Amy Shuen1997

Introduction

The fundamental question in the field of strategic management is how firms achieve and sustain competitive advantage.

Models of Strategy Emphasizing the Exploitation of Market Power

• Competitive forces approach

• Strategic conflict approach

• Game theory

• Co-opetition

Models of Strategy Emphasizing Efficiency

• Resourced-based perspective

• The dynamic capabilities approach: Overview

Toward A Dynamic Capabilities Framework

• Terminology:

1. Factors of Production2. Resources3. Organizational

Routines/Competences4. Core Competences5. Dynamic Capabilities

• The firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments

6. Products

Toward A Dynamic Capabilities Framework

• Market and Strategic Capabilities1. The key of building a conceptual frame

work related to dynamic capabilities is to identify the foundations upon which distinctive and difficult to replicate advantages can be built, maintained, and enhanced.

2. Identify what is not strategic(need, unique and difficult to replicate).

3. Fundamental distinctions between markets and internal organization.

4. The properties of internal organization cannot be replicated…

Toward A Dynamic Capabilities Framework

• Processes, positions, and paths.

• The competitive advantage of firms lies with its managerial and organizational processes, shaped by its asset position, and the paths available to it.

Toward A Dynamic Capabilities Framework

• Processes

1. Organizational and managerial processes

2. Learning

3. Coordination/integration

Toward A Dynamic Capabilities Framework

• Positions

1. Technological assets2. Financial assets3. Reputational assets4. Structural assets5. Institutional assets6. Market assets

Toward A Dynamic Capabilities Framework

• Paths

1. Path dependencies

2. Technological opportunities

3. Assessment

Toward A Dynamic Capabilities Framework

• Replicability and imitatability of organizational processes and positions

1. Replication

2. Imitation

Conclusion

Conclusion

• Efficiency vs. market power• Normative implication

1. Unit of analysis and analytic focus2. Strategic change3. Entry strategies4. Entry timing5. Diversification6. Focus and specialization